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Branch Management

John Voorhees, consultant and advisor at Peak Performance Consulting Group, was one of seven experts asked to share their vision of what bank branches will look like in the future in this Banking Strategies article and as part of the Executive Report on the Evolution of the Branch.

 

Speaking specifically about how customers will be assigned, John states “The platform will consist of even more specialists, and platform bankers may be assigned a portfolio of customers when issues need to be resolved—think of the olden days when you could go see ‘your banker.’ Customers may be able to communicate with branch personnel via Skype and more banks will also have private soundproof rooms in which customers can have face-to-face conversations with offsite bank specialists via video-conferencing.”

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For years the industry’s eyes were on Wells Fargo as a cross-selling winner. That reputation went down in flames with last year’s sales scandal. But banking’s eyes continue to scan Wells, which recently introduced a revamped performance management and rewards program that the bank’s leadership described as a beginning, subject to revision based on ongoing experience.

 

“The devil is in the details,” and the potential improvement lies in careful monitoring were points of agreement among experts interviewed by Banking Exchange  who looked at the summary released by the bank earlier in January.

 

“It’s a very positive step,” says David Kerstein, president of Peak Performance Consulting Group. “I’m pleasantly surprised that they have taken such aggressive steps. I think this is the right way to go for the industry, not just for Wells Fargo.”

 

He says it would be essential to use such tools as mystery shopping to have an independent view of how well the program works where customer meets banker.

 

“You have to be sure that you are building customer relationships and doing the right thing,” says Kerstein. “Wells had lost sight of the overall customer,” he adds, in its earlier emphasis on cross-selling. If the bank can make the team dynamic work and produce the longer-term results it hopes for, that will be a very positive development, he says.

 

Further, if employees can truly work as a team, and the incentives pay off in that context, “turnover may be reduced,” Kerstein adds.

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This article by Peak Performance consultant Jon Voorhees was originally published in BAI Banking Strategies on October 10, 2016.  Voorhees is former head of distribution strategy and execution at Bank of America Corp.  

 

It seems like every week you hear about another bank’s plans to close some large number of branches. Some analysts predict (though I don’t agree) that half of all branches open today will close in the next few decades as online and mobile banking fully takes hold with consumers and small businesses.

 

Due to today’s very low interest rate environment, margins have been squeezed for several years.  Banks have felt unrelenting pressure to cut expenses. And branch closures represent a natural target because customers have migrated many of their transactions to the newer, more flexible e-channels rolled out over the last ten years. There are even seemingly ubiquitous phrases that CEOs and CFOs trot out when announcing closures. Like these:

 

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The Following is an edited extract from an interview with S&P Global Market Intelligence. The original can be found here 

 

S&P Global Market Intelligence recently spoke with Jon Voorhees, former head of distribution strategy and execution at Bank of America Corp.  During his 17-year tenure Voorhees led the transformation of BofA’s physical distribution channels including branches and ATMs. He has joined Peak Performance Consulting Group as consultant and adviser.

 

S&P Global Market Intelligence talked to Voorhees and Peak President David Kerstein about different distribution strategies.

 

By Rabia Arif

 

S&P Global Market Intelligence: Do you think banks are innovating enough to keep up with the current times and how important is it to change?

 

Voorhees: Many firms out there are aware they need to change but they don’t know how to actually do it. And they are stuck in the… analysis/paralysis mode. They just need to get on with it.

 

The thing about branch distribution or ATM distribution is, change doesn’t come quickly. I think most organizations today are not moving quickly enough and it’s because they are fearful of the downside of not doing it well.

 

Kerstein: There are legitimate issues that people are worried about. Most banks are a combination of acquisitions, which means that they have got a mishmash of real estate. They might have a paramount amount of capital invested in them, and they are not easy to reconfigure.

 

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Jim Marous, who’s work I respect, asked for our insight and input to his annual Top 10 Retail Banking Predictions. Here are 4 predictions for 2016. What do you think?.

  1. Universal Bankers will become “universal”, and will be the standard staffing model in most bank branches. And this will not just be cross-trained tellers but a true merging of the teller and personal banker role.
  2. The shift to digital will accelerate. Up to now it has primarily impacted routine monetary and service transactions. But we are at an inflection point where account openings and advisory services will be delivered remotely. This will represent a fundamental shift, where the physical branch will support the digital channels, rather than the reverse.
  3. With more touchpoints, mapping the customer journey becomes critical. Understanding where they start, how they use channels in tandem, and where they stop along the way will be essential to managing relationships in the future. This will require adoption of new data management tools and skills.
  4. The call center is back! It will no longer be a support function to the branch network, but rather the hub of the customer experience. With customers using more channels than ever before, they expect consistency across all touchpoints. These new “customer experience hubs” are well positioned to bridge both physical and digital channels.
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As consumers and small businesses shift to alternative channels, it is critical that financial institutions improve the operational and sales efficiency of the brick and mortar channel. That means fine tuning every point of contact to optimize effectiveness.

 

Financial institutions of all sizes are facing challenges to their retail branch system. j0177737Technological innovation, starting with the introduction of ATMs, then internet banking, and most recently mobile banking, has resulted in declining branch usage. Consumers and businesses don’t need to go to the bank as frequently as they did in the past now that routine monetary and service transactions can be easily handled on a personal computer or smartphone.

 

Consumers want branches, but declining usage is reducing sales opportunities and revenue growth. As routine servicing and monetary transactions continue to migrate out of the retail branch, the fundamental nature of bank branches must undergo a dramatic transformation.

 

The bottom line is that, with fewer teller transactions, branches must become more efficient as sales and marketing centers. This can be achieved through greater micro-market targeting of marketing messages in order to maximize the sales opportunity from limited branch traffic and to optimize trade area sales penetration.

 

Up to now, many financial institutions have employed a one-size-fits-all strategy. Branches are often similar in size and style with limited differentiation. More importantly, marketing strategies are frequently implemented uniformly across the network with limited variation of messaging based on unique branch or trade area characteristics.

Improve Revenue with Targeted Strategies

 

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